The deductions for early retirement are to rise from 0.3 to 0.4 per cent for each month taken early. This was announced by the CSU state group leader Alexander Hoffmann, as the Berliner Zeitung reported on Friday, 13 November. It would affect everyone who wants to draw their old-age pension before the regular date – their permanent deduction would grow noticeably.
“The deductions are to rise from 0.3 to 0.4 per cent per month, that is overdue,” Hoffmann told the Redaktionsnetzwerk Deutschland. A still higher figure had been discussed previously: “It was long under discussion to raise them to 0.5 per cent. Now they will – legally secured – land at 0.4 per cent,” the CSU politician said.
A start date is missing – the timetable lies with the labour ministry
Hoffmann did not name a fixed date. Asked about the timing, he said, according to the Berliner Zeitung, that the rule should ideally apply in such a way that it takes effect for the 2027 budget year. The federal government should supply the timetable: “The Federal Ministry of Labour will make a concrete proposal on the timetable,” Hoffmann said.
The background is a savings step by the federal government. It wants to cut its subsidies to the pension insurance in 2027 much more sharply than initially planned – by three billion euros instead of the originally budgeted one billion euros. According to Hoffmann, the higher deductions are to offset part of this cut. At the same time, this is to ensure that pension contributions do not climb more than expected: “We will not raise pension contributions beyond the planned level,” Hoffmann stressed.
An increase is nevertheless under discussion: for 2028, according to the Berliner Zeitung, a significant jump in the contribution rate from the current 18.6 to 19.7 per cent is expected.
How the deduction works – and since when it has existed
According to the German Pension Insurance, the deduction rule was introduced in the mid-1990s, and the percentage has remained unchanged since then. The deductions are calculated individually: anyone who retires early from a certain age currently receives 0.3 per cent less old-age pension for each month taken early. The earlier the exit, the more the deduction adds up – and the greater it becomes if the rate rises to 0.4 per cent. The deduction applies permanently.
At the same time, the CSU is demanding movement on the deduction-free pension after 45 insurance years, the so-called “pension at 63”. “Cosmetic changes are not enough. We need genuine structural reforms,” Hoffmann said. He described the rule as “a design flaw in the pension system that costs billions and does not specifically benefit those who really need an early exit”. If the SPD wants to hold on to it, it must propose savings of the same amount elsewhere.
Hoffmann referred to earlier agreements: “That is why at the time we supported the SPD’s pet project, the pension-level floor until 2031.” Now the expectation is “that the SPD also keeps its promise”.
According to the report, there is great resistance in the SPD to completely abolishing the deduction-free pension. The benefit should accordingly be granted only in hardship cases. Because of the coalition dispute, the entire pension reform is being delayed. Most recently, there was discussion of changing the calculation of the 45 insurance years instead of a complete abolition – for example by no longer counting periods of receiving unemployment benefit.
For everyone considering an early exit, the situation remains unclear until further notice: the higher deduction has been announced but not decided, and the timetable depends on the proposal from the Federal Ministry of Labour. Anyone retiring today at 63 is still subject to the old rate of 0.3 per cent per month.
